Companies can take practical steps to protect themselves from the FCPA risks posed by third parties. These include conducting due diligence on all third parties, and elevating the extent of that due diligence based upon the risk posed by the third party, including FCPA-specific representations, warranties, triggered audit rights, and termination rights in all third-party contracts; and training third parties on the FCPA.
Complications, complications: Companies can be held liable for the actions of subsidiaries, joint ventures, and other partners. Even if a clean tech company arrives to the deal quite late, whether as a financier, provider, or other player, on a project won with bribes, the entire project and all of the parties involved are typically tainted. Clean tech companies should make sure FCPA compliance is a standard part of all contracts with partners.
Clean tech companies are also at risk for successor liability in large deals put together by other entities. Due diligence is necessary even if a deal has been purchased and packaged, and seems good. The U.S. government has been clear that successor liability can apply to FCPA violations. The U.S. Department of Justice and the Securities and Exchange Commission recommend that companies conduct preacquisition due diligence to ensure, among other things, that contracts were not obtained illegally and to reduce the risk that the acquired company will continue to pay bribes.
Clean tech companies have the benefit of compliance lessons learned from longer-standing industries. Antibribery compliance need not be ruinously expensive or unduly complicated. Companies should ensure that they have a plan, reasonable resources, internal political will, and the stamina and determination to stay with the plan even when it means slowing the pace of growth.
Alexandra Wrage is the president of TRACE, an organization dedicated to providing smart, cost-effective antibribery compliance tools and services to companies. Email: wrage@traceinternational.org.
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